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Everyone wants to grow their sales - so here are some thoughts on how you can help make that happen - without damaging your future sales by bundling incorrectly.
When you start creating your product range you often create complementary products. This may lead you to start to offer product bundles that include 2, 3, 4 or more of your products at an attractive price for the customer. If you have 3 products that cost $750 each - then creating a bundle that costs $1,500 for all 3 products is attractive for both you and the customer. The customer gets 3 great products for the price of 2 and you get the customer to give you $1,500 instead of $750.
So it sounds like everyone is winning - which is great news. But what happens when you add a 4th or 5th product that cost $750 each? You may feel that you are unable to raise the price of the bundle above the current level and so you leave it alone at $1,500. The customer is very happy now - getting 5 products for the price of 2, but your sales growth may flatten out as you have not received any additional money for the extra development effort that you have put in.
As you add more products the effort to create individual installation kits grows and one day you decide to stop making the individual products available at all - as it is too much effort to make 20 installation kits every time you revise your products.
So now every customer has to pay you $1,500 for your bundle or product suite of 20 products - which sounds much better than $750. But you may have inadvertently forgotten that 20 * $750 is worth $15,000! Or you may have allowed your technical difficulty with installation kit creation to dictate your commercial product pricing. Or you may have left your price locked at $1,500 for too long, arguably for no good reason - just “a gut feel” that you cannot put the price up beyond $1,500.
Possibly worse still - you may have alienated a part of the market that cannot afford $1,500 and was happy to spend $750 on a single product that exactly met their need. Or you may have forced your customer to buy lots of additional stuff they did not need right now for only $1,500 and lost the opportunity to sell anything else to them in the future.
The solution may be quite straightforward. Unlock the full value of your products by unbundling the most popular products from your suite and make them available again individually for $750 or even $999. You will then find it is easier for customers to buy what they really need. You can re-visit your entire product range and re-price and re-bundle the various offerings.
If you go back to our example of 20 products worth $750 each, this may allow you to create 4 new bundles at $1,999 each, still good value for the customer if each bundle includes 5 products worth $750 or $999 each. Re-visiting your product range may allow you to sell all 20 individual products again at $750 each and manage the release cycle one product at a time. This may allow you to focus on the features and quality of each release - which will make customers more satisfied with your products.
More importantly selling the individual products will help the customer pick the product that best meets their needs, without getting other products they do not really want right now. At the same time - you get to unlock the full value of your product range that is currently hidden inside your bundle or suite. Your sales may also improve over time - as the total value of your product offering has been unlocked.
Are you asking yourself - "So why does this matter to me? I don't have 4 products, let alone 20! I only have 2 product editions: a WinForms edition and an ASP.NET AJAX edition." Well if you are about to create a WPF edition and Silverlight edition of your product in time for the launch of VS 2010 - you will shortly have 4 editions. So you need to be careful to avoid the temptation to throw all 4 editions into 1 big bundle for a very low price. Otherwise you will have gone to a lot of extra development effort and have 4 platforms to support - but your sales will not increase to reflect the time and effort you have invested.
Bundles and suites are a great idea - but only when they are used to drive up your average order value from a customer - not to drive it down. Remember your customer wants you to stay in business to be there to support him/her in the future - so make sure you strike the right balance of delivering high quality, high value software to your customers - without damaging your sales.
Bundle your offerings carefully and if you think you have got it wrong - don’t be scared to go back and re-visit your product range and unbundle to get the pricing and licensing model right and unlock the full value of your product range.
If you would like to discuss this topic further or would like advice and guidance on product pricing and licensing models then contact Harry Kelly: harryk@componentsource.com
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For the last few years we have run a Holiday Season Special Offer to help you stretch your marketing budget that bit further in the coming year. This year we will be running our offer again from mid-November until the end of December. The offer will allow you to buy Web site advertising and Email Newsletter advertising from us in advance at a reduced price. All our Web site adverts and Email Newsletter adverts will be available at a discount of 20% and you will be able to book them now and use them anytime during 2010.
You will still get your Publisher Program tier discount. So our Enterprise Partners will get a further 40% discount, Corporate Partners 30%, Professional Partners 20% and Authors 10% discount on top of the already lower prices.
For example - a Web advert that would usually cost $500 will be reduced to $400 during the Holiday Season Offer and if you are a Prof Partner you will get your usual 20% discount on top - reducing the price further to only $320! That's a total discount of 36%...for a Professional Partner. If you do the calculations this means Enterprise Partners can get 52% discount, Corporate Partners 44%, Prof Partners 36% and Author tier members 28% discount!
If you want to start planning ahead now - take a look at the current prices for Web site & Email Newsletter adverts using the links below. The November Publisher newsletter will be sent out in mid-November to announce the start of the Holiday Season Offer - happy shopping!
Remember: If you want to see your sales grow in 2010 as we recover from recession, you will probably need to spend more on marketing in 2010 than you did in 2009!
On-line: https://www.componentsource.com/services/publisher/marketing-web-site-advertising.html
Email: https://www.componentsource.com/services/publisher/marketing-email-advertising.html |
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ComponentSource US News
Are you exhibiting or attending the Microsoft PDC 2009 Conference in Los Angeles, CA in November? If so - we would like to meet you to discuss your product plans for 2010. Please contact Chris Brooke to arrange a meeting: chrisb@componentsource.com
European, Middle East & Africa News
Are you exhibiting or attending the Microsoft Tech Ed Europe 2009 Conference in Berlin, Germany in November? If so - we would like to meet you to discuss your product plans for 2010. Please contact Harry Kelly to arrange a meeting: harryk@componentsource.com
Asia/Pac News
We are increasing the print run for our Korean catalog in 2010, so make sure you take advantage of the increased reach this will give you to our customers. Remember we translate your English artwork for you into Korean - so it easy for you to advertise with us and reach new customers in South Korea. Please email Scott Sata: scotts@componentsource.co.jp
Market News
Name changes in October! Flexera Software is the new name for Acresso Software, prior to that they were part of Macrovision, but you will know them as the creators of InstallShield, InstallAnywhere and AdminStudio. Also Change Vision renamed their UML modeling product previously called Jude to astah* earlier this month. You can keep up to date continuously with all these updates on our News page: https://www.componentsource.com/news/index.html |
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